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In the jewelry supply business and in the jewelry business in general inventory management is often the very key to success. Inventory management is also an aspect of the jewelry business that has a variety of challenges and is always fluctuating. As the inventory manager at Nina Designs, I would like to share my current approaches to inventory management that may help you or inspire a dialogue of further discussion on the topic. In October I discussed “New Items and Opening Orders”. This month, I will discuss “Reviewing Past Sales and Projecting Into The Future”.

Using past sales figures as a tool for re-ordering is an approach that will save you money, time and give you focus for the management of your inventory. You will save money by allocating your funds towards items that are selling well and ordering in volumes that will prevent you from being overstocked yet not running out of inventory. You will save time and gain focus through having a set routine for re-ordering as well as having fewer overstocked items to manage.

I review the sales for the past three months and use those averages to project into the future. If I notice that I am selling 30 pieces of an item per month on average then I need to decide how many months inventory I want on hand for that item. I usually allow for three months inventory on hand to allow for unexpected large orders from customers as well as turn around time from our vendors. My intention is to reduce the possibility of being overstocked while also doing my best to always have stock available to our customers.

It is critical that I take note of the timing of the past three months sales because if I am drawing information from a slow period of time and projecting my sales into a busy season, I may want to round up on my order volume. Similarly, if I am drawing sales information from a period of time that is very busy due to holidays etc. and projecting my sales into a slow season, I may want to round down on my order volume. For example, right now I am drawing sales information from our busiest season of September through December and ordering for a time period in which sales will be slower at the beginning of the new year so I will be rounding down on my order volume.

Another essential aspect is to review the response to new styles separately from other styles because of peak interest and the consideration of whether the sales of the new style will carry through a long period of time or drop off after the style is no longer new. Each new style is reviewed based on the volume we have on hand and how many customers are purchasing it in addition to quantity that we have sold. If only a few customers are ordering in large volumes, I will hold off on re-ordering. If there are a high number of customers purchasing a new style in a short amount of time, I may consider re-order a conservative amount to have the item in progress and reduce the risk of running out of inventory.

Finally, I keep an eye on seasonal items so that we have them on hand for the season in which our customers purchase them from us. For example, I will order larger volumes of heart styles to arrive and be available for customers during the months of October through December so that our customers can have these items available for their Valentine’s orders. Similarly, I will order larger volumes of our marcasite collection during the months of August, September and October so that they are available for our customers during the Winter Holidays and I will order larger volumes of “Mom” items during the months of February, March and April so they are available to our customers for their Mother’s Day gift season.

I hope this blog series will help you with your next order or re-order. In my future blogs for this Inventory Management: The Shifting Target series, I will be writing about “Being Careful of the Outliers”

I look forward to your responses or further questions on this topic.